WHENEVER African countries send out trade delegations to solicit for investments from businesses in developed countries there has always been excitement about the prospects of high returns on investment from the continent. But this excitement has regularly been dampened when discussion turns to electricity.
In a continent where 620 million people lack access to electricity, the situation does not augur well for businesses that have to spend a huge amount of money every year on oil-consuming generators to provide power to run the enterprises. This is an added financial burden that foreign investors are at times reluctant to take on – thus inhibiting economic growth in Africa and stunting its development.
For example, in Ghana frequent power failures place businesses at financial risk. According to a report, one shop in Accra with facilities for cold storage is fighting a losing battle with frequent blackouts. ‘The store’s freezers break down so often they don’t make any money,’ the manager was quoted as saying, adding, ‘And the little they have made goes in to repairing the machines.’
It is even more precarious in Ghanaian hospitals. The BBC reported last year that blackouts affecting the hospitals resulted in ‘midwives [using] torches or the light on their mobile phones to deliver babies.’ Then there is the problem of trying to store vaccines that are meant to be kept in cold surroundings when there is no electricity to power fridges or freezers.
African countries have sought to provide electricity for citizens and businesses to aid development and tackle poverty, but the cost of oil-fuelled electricity has been prohibitive. The alternative is to turn to coal, which African governments argue is the best way forward. They made their case clearly ahead of this month’s UN Climate Change Conference in Marrakesh in Morocco where the recently ratified Paris Agreement, dealing with reducing greenhouse gasses emissions and financing to combat climate change beginning in 2020, was top on the agenda.
The 22nd session of the Conference of the Parties (COP 22) also took place at a time of momentous political change in the US, where President-elect Donald Trump pledged during his campaign to revive America’s moribund coal industry. His promise saw him winning overwhelmingly in once thriving coal mining communities, helping him to secure key swing states.
Outgoing President Barack Obama is all for increasing access to electricity in sub-Saharan Africa by adding more than 30,000 megawatts of electricity generation. But he is not a fan of coal, despite its importance to the US economy, in these sensitive days of the climate change debate. When he launched his Power Initiative in 2013, he clearly said that his administration would no longer back the use of coal abroad for electricity generation unless there were carbon emission controls.
But modern life is unimaginable without electricity and as such improving access to electricity worldwide is critical to alleviating poverty. According to the latest figures, coal-fired power plants currently fuel 41 per cent of global electricity, and in some countries coal fuels a higher percentage of electricity.
According to the Energy Information Administration (EIA), global coal consumption in 2020 is expected to be almost twice what it was in 2000, and it will continue to grow. In 2035, the International Energy Agency (IEA) is expecting coal to have a 47 per cent share of the generation market, equivalent to its share in 2011, and to have a 29 per cent share of total energy demand, the most of any fuel, surpassing oil which currently has the highest share.
Given this situation, it is not surprising that African countries are keen to use coal to power the continent development and reduce poverty. ‘There’s never been a country that has developed with intermittent power,’ Jim Yong Kim, the President of the World Bank, has said.
African leaders made their intentions clear at the US-Africa Leaders’ Summit in Washington in 2014, arguing that developed countries had used coal to fuel their industrialisation. Sospeter Muhongo, Tanzania’s current minister of mines and energy, said then when he was minister of power, ‘We in Africa, we should not be in the discussion of whether we should use coal or not. In my country of Tanzania, we are going to use our natural resources because we have reserves which go beyond five billion tons.’
African governments have pointed out that the original UN Framework Convention on Climate Change (UNFCCC) places development first when it states, ‘Economic and social development and poverty eradication are the first and overriding priority of the developing country partner.’
There does not seem to be any running away from the use of coal to fuel power, given that some 2,300 coal-fired power stations are being built or planned around the world. The increased demand is coming mainly from African and Asian countries.
Both the Energy Information Administration (EIA) and the International Energy Agency (IAE) are expecting Africa to increase its coal use. The EIA is projecting a rise of 70 per cent between 2010 and 2040 while the IEA is expecting an increase of almost 50 per cent between 2011 and 2035. Africa has 35 billion tons of recoverable coal reserves and at the current rate of consumption, it would last 122 years.
The IEA estimates that African countries need $400 billion over the next 20 years to provide power to citizens without electricity. Experts say that despite America’s policy to discourage coal-fired power plants, there are many countries ready to help.
Benjamin Sporton, chief executive of the World Coal Association, noted, ‘For many countries, coal will continue to play a significant role in economic development, industrialisation and urbanisation. It’s important to recognise that so far 19 countries have included low emission coal technology in their Intended Nationally Determined Contributions (INDCs), which are the foundation of the Paris Agreement.
‘This means that for the Paris Agreement to be successful, we need to support these countries, most of which are developing and emerging economies, to shift their coal fired electricity to more efficient technologies so they can meet their climate commitments,’ he added.
The Association said that at the COP22 negotiations on implementing the Paris Agreement in Marrakesh, it was important to look at ways of facilitating technology transfer and financial support for low emission coal technologies. ‘We cannot wish coal away. Coal is part of the solution,’ the Association said in a statement. ‘We need all energy sources to meet global energy needs, and we need all low emissions technologies to reduce emissions. That means that high efficiency low emissions (HELE) coal technology and carbon capture use and storage (CCUS) must be recognised as essential mitigation technologies.’
In Ghana, the government has set out a plan to double the country’s electricity capacity by 2020 and stimulate economic growth. Currently, some seven million Ghanaians – or 28 per cent of the population – do not have access to electricity. In urban areas this is eight per cent while among rural communities this is 50 per cent. The government’s plan is to add three gigawatts of capacity in four years’ time, which would provide electricity not just for the whole population but also for industrial use.
Current capacity stands at 3.6 gigawatts and the energy mix consists of 56 per cent from gas and oil thermal plants, 43 per cent hydroelectric, and 0.6 per cent from solar. The 2020 plan includes two gigawatts from a single coal-fired power station; 0.4 per cent from liquid petroleum gas; 0.2 gigawatts from small-scale solar, with the rest yet to be confirmed.
President John Mahama has spoken about the country’s energy crisis and the pressure on the government to meet rising electricity demands of 10 per cent annually. ‘The effects and frustrations posed by the power deficit are clearly felt in our work places, our homes, schools and hospitals. Big businesses and industries are also suffering and threatening to lay off workers,’ he said, adding, ‘I do not intend to manage the situation as has been done in the past, I intend to fix it.’
Although the plan will provide millions more Ghanaians with safe and secure electricity supply, Western governments are talking against the use of coal for this purpose by African and emerging nations. But, as experts point out, the extremely important coal-fuelled plant at Ekumfi in Ghana’s Central Region, which will start taking shape in April 2017, will alone account for two gigawatts of the government’s energy plan, making it vital to the country’s energy future. Ghana is also leading the world by opting to install HELE, extremely critical technology in the country’s coal stations.
Nigeria, too, is forging ahead with the use of coal to generate electricity. In an oil-rich country that has a woeful reputation for power failures, any attempt to address the situation is crucial, according to experts. Nigerian finance minister Kemi Adeosun told a recent joint meeting of the International Monetary Fund (IMF) and World Bank, ‘We in Nigeria have coal but we have a power problem, yet we’ve been blocked because it is not green. There is some hypocrisy because we have the entire Western industrialisation built on coal energy. They are saying: “You have to use solar and wind”, which are the most expensive,’ she added.
Even developed countries are committing themselves to continuing to use coal for generating energy. Germany’s economy minister, Sigmar Gabriel, said last month, ‘It [coal-fuelled power] will on no account be switched off in the next decade – in my opinion not even in the one after that.’
Many commentators have said that the Paris Agreement means the end for coal, but the appetite for affordable, reliable and accessible energy in developing and emerging economies, particularly in Asia means demand for coal continues to grow. Low emission coal technology features significantly in the plans of about 19 countries that together produce 44 per cent of the world’s emissions.
So, despite strong resistance from some Western countries, it is clear that there are other countries that are willing to invest in the construction and deployment of coal-fired generating units in Africa because of the potential developmental and poverty-reduction dividends to the continent.